Culture’s Impact On Successful Change

Change Management

“Culture eats strategy for breakfast.”

By now we’ve all heard that famous quote attributed to Peter Drucker and have come to recognize its validity. To grasp the powerful connection between culture and strategy, think no further than your last change initiative. Many change initiatives derail shortly after launch due to outright rejection or steady erosion. Change planners overlook and significantly undervalue the power of organizational culture. And, even when change plans implode, few leaders examine how organizational and societal culture contributed to the failure.

Change initiatives frequently fall short and the most cited reason for that failure is culture. Evaluations performed post-change report that up front change planning only considered culture in 24% of the initiatives.

Culture encompasses ideas, values, traditions, and those principles impact social relationships and practices. For change to be fully successful, change goals and culture must be aligned.  Cultural dimensions expand beyond individual organizational traditions to include global cultural distinctions.

Five cultural variables must be considered when crafting a change plan:

  • Power distribution practices
  • Gender assumptions and stereotypes
  • Risk tolerance levels
  • Length of time horizon
  • Indulgence and compliance expectations

Power distribution

Change efforts to flatten an organization may challenge power distribution expectations. Some leaders and societies prefer to employ hierarchy, chain of command and acceptance of unequal authority as positive characteristics.  Eastern cultures may employ greater power distinction by title.  The respect for rank may include having employees may stand when their manager enters a room.  An action unlikely to be seen in Western cultures where there is less deference to position and title.

Gender Assumptions

Diversity initiatives might stumble if they deviate significantly from gender and ethnic stereotypes. Assumptions that only males are assertive and achievement oriented combined with the supposition that females alone are cooperative and caring can stifle inclusion initiatives. Silicon Valley, which is largely viewed as progressive, has gender imbalances in the ranks of management.

Risk Orientation

Culture based disparities also surface in terms of risk orientation. Some cultures embrace elevated levels of risk and rapid change believing that risk produces rewards.  While risk avoidance emerges in a desire for consistency and an avoidance of ambiguity to steer clear of danger. This pattern dominates across nationalities and industries. Utilities traditionally shift slowly while IT firms leap swiftly at opportunities. The same risk practices separate nations where the US accepts risk, while some Eastern countries accept risk with more caution.

Time Horizons

Power distinctions, gender and ethnic assumptions, and risk orientation are daunting factors, but even more formidable is a cultural split based on time frames. Some organizations stress the need for long-term planning when others emphasize immediate action. Thirty-year planning horizons are comfortable for some while others prefer an annual plan. The latter assumes that information is changing so fast that the window for accuracy requires short-term planning.   Military planning stretches far beyond that short window of time.  The military-like leaders in China operate using a framework that is decades long.

Indulgence and Restraint

Military organizations also require a level of discipline and strict regulations that constrain social input. Objectives like employee gratification, a level of joy, flexibility, and fun common to many firms are not prevalent in military organizations. Indulgent firms and societies allow relatively free gratification of basic and natural human drives reflected in an effort to enjoy life and have fun. Discipline or restraint cultures ignore gratification to regulate behavior.  Uniform behavior strengthens efficiency, predictability, stability, confidence, and trust. Each viewpoint offers benefits and possesses limitations.

Culture is relevant in planning change. Assessing which view is right or wrong is not germane.  We must operate given the existing culture, which means we must recognize cultural variables. The ready, fire aim approach has not worked in the past and it won’t work in the future. We cannot “plan now and think later” if we want change to be successful.

This article was published at BizCatalyst360.

Future Proof Your Thinking

Stop the World I Want to Get Off opened on Broadway in the 1960s, and decades later the cliché still takes center stage in our quest to maintain the status quo as changes engulf us at a dizzying pace. Adopting an “everything is fine” mentality creates the illusion that we can safely hide, ostrich style, while dynamic changes transform our world. Jack Welch, retired CEO of General Electric, declared this challenge: “If the rate of change within an organization is not equal to or greater than the rate of change surrounding that organization, the organization will die!” Firms that fail to keep pace with change do not thrive.

Success without change is a myth. How many would have imagined that one of the largest lodging companies owns no property (Airbnb), or one of the largest transportation companies owns no vehicles (Uber)? The winds of change are relentless despite our resistance to the speed at which they are advancing. We grasp for the familiar and hold on to what we know. Regardless of our desire to not “mess with success” without change our future evolvement is lost.     

The Mayo Clinic has a well-earned reputation for patient care. Despite accolades and praise, they recognized the value of fixing what is not broken. In 2008, the same year Lehman collapsed, the Mayo Clinic Board of Trustees launched an initiative to restructure their programs for adolescent care, reducing the average time to diagnosis illness. They also discovered ways to reduce the use of anesthesia and imaging. Doctors bristled at some of the modifications that impacted their routines, including cardiac surgery practices. However, they saw the handwriting on the wall indicating that without new methodologies, the future would include increasing costs while reimbursements would be reduced.

Mayo Clinic could have proudly accepted their status as one of the top clinics and ignored options to dig deeply and adjust to changing realities.

Instead, they burst through the “we are great” bubble to broaden their perspective and search for new opportunities. As Daniel Kahneman reported in Thinking: Fast or Slow, “We tend to think that what we see is all that there is to see. We adopt blinders to shield us from contradictory information.”  We skim over, or discount, data that does not support our beliefs. We get stuck in the narrow space of present reality instead of creating space for broad innovation.

To counter our tendencies to rely solely on information that matches our assumptions and to depend on information from known sources, we can act to expand narrow thinking. Consider the following options for avoiding confirmation bias:

  1. Allocate time for reflection, analysis, and imagination. The KISS principle (Keep It Simple Stupid) has only an element of truth in it. Dynamic factors and new realities are rarely simple. H. L. Mencken captured this truth by saying, “There is always an easy solution to every human problem” neat, plausible and wrong.” We must go beyond what has always been done if we are to stretch our capacity and secure our future.
  2. Identify “motivated reasoning” where rational analysis twists to substantiate current practices. Retaining existing procedures offers comfort, but blinds us to wiser alternatives. Smart choices mean we must consider new ideas to address the cresting waves of change. Standing still in a quicksand environment is terminal. As Einstein stated, “We cannot solve our problems with the same level of thinking we used when we created them.”
  3.  Recognize the importance of asking probing questions. As Dr. E. Edwards Deming remarked, “If you do not know how to ask the right question, you discover nothing.” Wisdom requires the search for new possibilities and alternatives. Expand your mindsets to see around corners, detect trends, examine implications and identify new opportunities.
  4. Accept the fact that the greatest obstacle to our future is not ignorance, but the illusion that we already know all that we need to know. Greater specialization has produced benefits but it also introduces problems. Specialists often adopt a narrow frame of reference and lose sight of interdependencies embedded in the big picture. We must dig deeper and search more broadly to detect new knowledge and insights by asking what is new, what have we learned and what novel resources or business models should we tap. Mark Twain observed, “What gets us into trouble is not what we don’t know. It is what we know for sure that just ain’t so.
  5. Resist peer pressure and the temptation to go along with the crowd. We may become caught up by enthusiasm for a new initiative but step lightly and don’t just go with the flow, because group-think usually conceals flaws. For a secure future, go outside the established parameters and strategically consider all mindsets to fully understand alternatives, risks, and opportunities.

We cannot stop the world–and we should not. Our future lies in embracing possibility thinking, adopting new mindsets, and leveraging change instead of watching from the sidelines. We can learn to see events as they are, address our mental traps, apply critical thinking practices and commit to casting aside status quo thinking in favor of proactive wisdom. The future is where we will spend the rest of our lives. We must study to understand trends that position us for continual success.

This article was first published at BizCatalyst360.

Walk a Mile in My Shoes: Understanding 6 Critical Mindsets

The Importance of Mental Conditioning

Changing the “Quick Fix” Leadership Mindset

By Mary Lippitt | August 6, 2012Organizational Development

 

In a complex world, speedy solutions rarely work. Unintended consequences, time lags, and interconnected systems whirled with risk and ramifications sidetrack easy solutions. There are no quick fixes and that leadership mindset needs to change.

Ralph Kilmann’s 1991 book, Beyond the Quick Fix: Managing Five Tracks to Organizational Success remains valid today–leaders need a new mindset that goes beyond simple response toward sustainable resolutions. In a rush to action, symptoms divert attention from root causes. Are today’s problems, issues, or opportunities really simple? Leaders should not be being playing the equivalent of speed tic-tac-toe where getting to any win first is the goal.

Acting is critical but it must be the right action at the right time in the right way for the right results. A quick overview, a readymade response or reverting to “what we have always done” cannot substitute for careful analysis, critical thinking, creative solutions, and integrated planning.

Dr. Paul Nutt in his 2002 book, Why Decisions Fail,reported that 80% of decisions are made without considering an alternative. While it is understandable that past success is alluring, the financial advisors caution that past success is not a guarantee of future success also holds true in other fields. Leaders do not need speed as much as they need accuracy and sustainability.

This means that the leader’s role as the person with “all” the answers must change. Instead of thinking that leadership equates to the fount of all knowledge, a leader’s real role is to ask penetrating questions. It is discovery, innovative and systems thinking, not the “tried and true,” that deliver lasting results.

The next time a binary choice is offered, recognize it as trap. Few situations in life have only two options. And many have learned to present one reasonable proposal paired with one that is unworkable. The apparent easy choice leads into the uncharted school of hard knocks territory.

Instead, allocate time to examining assumptions, identifying multiple options, and considering both the possible and improbable before making the decision. Speed is not the answer on the highway or in organizations. Remember it was the tortoise and not the hare that won the race. Take the time and involve the right resource to get it right the first time.

Is it time to change your leadership mindset?

Blind Spots Sabotage Culture Change

By Mary Lippitt | March 27, 2012 change management

 

As anyone who has ever driven a car knows, blind spots are potentially lethal. This holds true in leading business organizations as well on the road, so it’s time we worked to eliminate them from one of the most critical business tasks of our age: culture change.

The danger of blind spots helps explain the continued popularity of Kaplan and Norton’s book The Balanced Scorecard: Translating Strategy into Action.That influential book, after all, addressed the value of having multiple measures or perspectives. Incomplete scorecards resulted in ignored aspects or blind spots.

Now, culture change initiatives must adopt this practice. To date, culture change initiatives generally concentrate on values, mission, personal interaction, and morale. All of these are important, but together they represent an incomplete picture. These blind spots help explain the poor rate of success – in the 11-30% range – among such initiatives.

To address those blind spots, I propose that the culture change scorecard needs to incorporate three additional factors:

Power Distance

Efforts to empower employees typically fail because words and actions send different messages. Power remains a valued commodity when seen from a narrow perspective connected to monarchs and monopolists. While the concept of power is emerging, power symbols remain in the workplace, from the offices to organizational charts. Extreme compensation gaps, for example, convey a power-related message that is louder than any tag line or mission statement ever could be. Such signals – and there are many – help reinforce cultures that tend to be more hierarchical and less flexible, even amid well-meaning culture-change programs striving for flatter organizations.

Risk Orientation

An organization’s risk orientation is also a critical culture change factor. The definition of an “acceptable” level of risk varies not only across industries, but across organizations. Managers may give lip service to innovation, but this will not resonate if there are high penalties for failure. What gets rewarded will get done and what gets punished or discounted will be avoided. This is not to suggest that a higher risk orientation is always desirable. However, there does need to be an alignment between management’s call for greater innovation – which often requires taking intelligent risks – and the culture that must reinforce management’s message.

Time Horizon

Culture change requires a combination of short-term and long-term thinking, but some organizations focus on one direction at the expense of the other, making change management effort difficult or even futile. In firms that focus on the short-term, quarterly goals may be chased at the expense of making investments in the future, and this can harm the ability to the react effectively to future developments. R&D, for example, can be cut back in the short-term but over the long-term, this can be disastrous for the company that needs to keep ahead of the competition. Likewise, too much focus on a desired future state can lead to cash flow issues that jeopardize the whole organization.

By incorporating these three factors into a change management model and adding new benchmarks to measure power distance, risk orientation and time horizon, we will have the peripheral sight as well as the hindsight and foresight needed to help drive culture change.

Effective Leaders Know When to Hold and When to Fold

By Mary Lippitt | June 7, 2011effective Leaders

If leaders keep on doing what they have always done, they will get the same results, which is a recipe for disaster. Both leaders and poker players need to know “when to hold and when to fold.” Effective leaders need to decipher the internal and external environment and adjust plans to actual reality and opportunities.

US Airways’ Captain Chesley “Sully” Sullenberger’s success in dealing with total engine power loss with a clear decision to land in the Hudson River stemmed from his ability to prioritize goals. In his biography, Sully talks about “goal sacrificing” having to select which goal is the most critical to act on. He accepted the loss of a multi-million dollar plane to save lives. He was able to make that decision only because he was clear about his priorities and the situation.

How effective are your leaders in dealing with change or handling unanticipated problems? Are your leaders prepared to make mid-course adjustments or do they keep on trucking with their plan on a pre-determined route no matter what is happening around them?

Concentrating on results, or leading with the “end in mind,” is one of Stephen Covey’s The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change.He stresses the importance of starting with the “end in mind.” But what happens when the start, middle or end changes? Staying the course or achieving what is no longer desirable should not be seen as an accomplishment. In fact, it can threaten an organization’s survival. Leaders who know how to keep their “eye on today’s key prize” based on current circumstances are those who succeed.

A solid understanding of the six business priorities helps leaders adjust to critical priorities and avoid being blindsided by “unanticipated” events. It is not just in hindsight that financial executives should have recognized that giving 90 to 95% mortgages was too risky. Experts were warning about a real estate bubble, and yet leaders continued to make mortgages. One bank executive summarized his decision making process by saying that “I know this thing will blow up, but as long as the music is playing, I have to dance.”

As Peter Drucker observed, “Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.” Can your leaders deliver the right results are at the right time in the right way and at the right cost? We cannot expect leaders to control events, but we can expect them to act wisely.

Effective leadership requires not only personal awareness and skills, but also business insight and judgment. Captain Sully knew how to prioritize his goals. He did not try to save the plane, and he did not try to make it to an alternative airport. He understood his resources, his situation, his team, and his key goal, resulting in a lifesaving landing. Are you doing all you can to help your leaders understand the critical goals and what it will take to achieve them? It should be your critical priority right now.

Breaking News! 50 Year Old CEO Found Sleeping in Crib!

By Mary Lippitt | May 31, 2011Organizational change, change management

I bet a few thoughts popped into your head when you read the title of this post.

  • What?!
  • Ridiculous!
  • Who in their right mind?
  • Err…how big was the crib?
  • Wait, I thought Charlie Sheen was in his 40’s?

A 50-year-old CEO sleeping in a crib is as ridiculous as a leader who insists there is no reason to change from the tried and true.

Organizations, like people, have a life cycle. Too often, leaders fail to correctly identify where they are in their organization life cycle and fail to make the adjustments necessary to accommodate changing circumstances, technology, competition and customer requirements; instead, clinging to one concept of leadership, a concept that no longer works.

In so many areas of life, consistency is considered a benefit or virtue. Not so when you’re talking about leading today’s organization. The demands of a baby, much like the demands of a new business, necessitate a constant devotion and involvement to keep pace with changing requirements. Whether a parent adequately adjusts to the teenage years or a leader flexes to meet changing customer expectations, agility counts.  If an organization’s leader stays mired in tradition or a parent gets stuck in one parenting stage, the opportunity for evolutionary change is lost.  The only option left then is radical shifts.

Entrepreneurs are famous for being too “hands on” and end up resisting the natural growth of their firm. They miss the need for professionalism as part of the organization life cycle. Leaders of mature organizations make a similar mistake by refusing to see the need to reinvent their firm, product line or processes. Holding on too tightly to the past is a recipe for failure, much as trying to hold on to a college student can invite turmoil.

Change is often easier to identify in a child than in an organization. The child’s need for new clothes or their changing interests and preferred technology are obvious. Organizational change may not be as clear as the rising marks on a door frame or wall, but change is ongoing and leaders must identify it and adapt.

The impact of the recession has created a fixation with cost cutting, waste reducing, and redundancy hunting. While these methods likely paid-off for many firms, sticking to them over the long term is ill advised. Companies and leaders who have the ability to recognize the change in their organizations have the ability to lead that change and stay ahead of the curve.  Adopting a firefighting mode in a crisis mode appears heroic.  It isn’t, and it invites disaster.

Leaders need to recognize their organization life cycle and help guide the organization through the natural changes.  Shifting may be the antithesis of consistency, but it is the bedfellow of excellence.  Make sure your leaders do not dig in their heels and fail to see how cycles impact them, much like the toddler who is in the “no” phase.

What signals have you used to successfully identify where your organization is in its life cycle?